Description of this paper

Your company is considering the purchase of a fleet of energyefficient hybrid delivery trucks. The trucks will require a total;investment of $1 million. Their expected useful life is five years, at;which time they will be sold for 10% of original cost. For tax;purposes, the trucks will be depreciated using MACRS, and are;classified as 5-year property. The investment will have no effect on;net working capital. If the trucks will reduce your companys;annual expense by $325,000, should you buy these trucks? Your;companys cost of capital is 14%, and its tax rate is 35%.

Paper#28312 | Written in 18-Jul-2015

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